By Tatiana Bautzer
NEW YORK- US Treasury yields were little changed on Monday, after trading higher for most of the session, as Federal Reserve Governor Christopher Waller said he was inclined to cut the benchmark interest rate at the Dec. 17-18 policy meeting.
The yield on the benchmark US 10-year Treasury note which was up earlier after manufacturing data releases in the morning, pared gains to 4.197 percent, slightly up on the day, after Waller’s comments. The US two-year yield, which typically moves in step with interest rate expectations, was up 1.2 basis points at 4.182 percent.
Yields on the long end of the curve slipped, with those on US 30-year bonds down marginally at 4.368 percent
“Policy is still restrictive enough that an additional cut at our next meeting will not dramatically change the stance of monetary policy and allow ample scope to later slow the pace of rate cuts, if needed, to maintain progress toward our inflation target,” Waller said in comments at a central bank symposium organized by the American Institute for Economic Research.
Waller compared the Fed’s battle with inflation to a mixed martial arts fighter in that sport’s unique arena. “Let me assure you that submission is inevitable — inflation isn’t getting out of the octagon.”
Ellis Phifer, managing director for fixed income capital markets at Raymond James in Memphis, said Waller’s comments were seen as reassuring. “His comment showed a stronger than usual support for a rate cut, but we still have to see what the jobs data will show later in the week.”
A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes seen as an economic outlook indicator, flattened slightly to 0.8 bp, compared with 1.4 bps late on Friday. – Reuters
